Define irony: after earlier in the week speculators went massively short the 2Y and 5Y, pushing the repo rate "super special" and deep in negative territory on hopes of disappointing auctions, it was the 2 and 5 Year auctions earlier this week which were surprisingly strong forcing yet another round of mistimed short covers. And as fate would have it, it was today's 7 Year "belly" auction that was ignored by most. It was also the 7 Year that just priced in a surprisingly weak auction, coming to life with a yield of 1.834%, stopping well through the 1.826% When Issued. Confirming the weakness was also the Bid to Cover, which at 2.369 was the lowest since November of 2013.

While we noted their 'nein'-ness with regard Greece earlier, it appears the Germans have take to satire to make their point... The following brilliant clip begins with a confident man exclaiming "We are Germans... we truly are a fearless bunch of mother-f##kers..." who then quakes in his jackboots "except for one man... V for Varoufakis."

Financial markets are upside down. Financial repression and belief in the “Fed put” pushed investors further and further out the risk curve over the past six years. Too many asset managers have remained fearful of underperforming peers and benchmarks; a powerful incentive to stay ‘risked-up’. The psychology of bullish, and faith in Fed abilities, have been too firmly embedded in the investor class. Given that markets don’t seem to want to believe that a June hike looks probable, we expect an outsized market reaction to a hike, lower long yields to accompany it, a flatter curve, wider credit spreads, higher market volatility, and materially lower equity markets.

In an Onion-esque story almosty too unbelievable to be real, IB Times reports, in a memo obtained by Capital New York, Cuomo officials announced that mass purging of email records is beginning across several state government agencies. The timing of the announcement, which followed through on a 2013 proposal, is worth noting: The large-scale destruction of state documents will be happening in the middle of a sprawling federal investigation of public corruption in Albany.

Overnight we learned from Vice Admiral Joseph Mulloy, deputy chief of naval operations for capabilities and resources, who testified before the House Armed Services Committee's seapower subcommittee that China "is building some fairly amazing submarines and now has more diesel- and nuclear-powered vessels than the United States," “They may not be the same quality, but their submarine forces are growing at a tremendous rate. They now have more diesel and nuclear attack submarines than we have,” the admiral told the lawmakers. “They are producing some fairly amazing submarines and they are actually deploying them.”

With Prime Minister Yatsenyuk putting his foot down and squeezing the central bank to lift capital controls, Ukraine's currency is totally collapsing this morning. Up over 5 handles to a fresh record low of 33.75/USD, we suspect currency trading will be halted any minute. While we discussed the endgame for Ukraine last night, on the street, things are dire with ATM lines, shelves emptied, and local currency exchanges marking up levels dramatically more than the 'official' rates...

Moments ago the Bank of Greece presented its latest, January, deposit data. And it's a doozy: following a record €12.2 billion monthly outflow, greater in absolute and relative terms than anything experienced during any of the previous Greek crises and bailouts, the total amount of Greek corporate and household deposits has now tumbled to just €148 billion. This number is in line with some of the more pessimistic expectations, and brings the total cash holdings at Greek banks to the lowest level since August 2005.

As one wit noted, it appears former White House Press Secretary Jay Carney is moving from one non-profit organization to another. As Politico reports, Carney joins Amazon on Monday as senior vice president for Worldwide Corporate Affairs - reporting directly to Jeff Bezos and topping current veteran PR Chief Paul Misener.

One day ahead of a key vote in the German Bundestag whether to ratify the 4-month Greek bailout extension, the biggest-selling, mass-market newspaper (or tabloid as some call it) with a circulation of 2.5 million, Bild, has made it very clear just how it feels about the latest Greek can kicking event.

Oh well, some are more equal than others. One day after Eurogroup head Dijsselbloem says France won’t get any more lenience... "France must respect EU budge rules," ... the EU over-rules him "France gets more time to meet EU budget rules."

In today's deluge of macro data, one number stood out: the parallel release by the BLS of the real average hourly earnings, which is simply taking the previously reported nominal hourly wage data, and applying whatever deflator gets released in parallel by the BLS. And, not surprisingly, after the nominal jump in January wages, a number which may very well be revised lower as has been the case so often before, courtesy of the headline deflation, the real jump in hourly wages was even higher. In fact, rising to an inflation adjusted $10.55/hour from $10.42 in December, it meant real wages rose by 1.2%, which was the best jump in hourly wages since... the months following the Lehman collapse. Because everyone remembers how the deflationary vortex in the aftermath of the Lehman bankruptcy led to a sense of wealth and eagerness to spend deflation adjusted wages.

Despite proclamations that "the shadow of crisis has passed," November durable goods orders were weak, December durable goods orders were weaker, and while January's noisy headline Durable Goods Orders beat expectations (+2.8% vs +1.6% exp), ex-Transportation it missed (printing +0.3% vs +0.5% exp.). A quick glance at YoY core capex and it is clear that the crisis has anything but passed. Capital Goods shipments fell a greater than expected 0.3% (against expectations of a 0.2% rise) for the sixth miss in a row and 3rd drop in the last 4 months.

As previewed earlier today, January CPI data was historic in that, 6 years after Lehman, the US just reported its first negative headline CPI print, with overall inflation, or rather deflation, in January coming at -0.1%, in line with expectations, and down from the 0.8% in December. On a monthly basis, CPI tumbled by 0.7% from December, driven almost entirely by collapsing energy prices. Excluding the Great financial crisis, one has to go back a few years to find the last time the US posted annual headline deflation.... all the way back to August 1955, or just about the time Marty McFly was trying not to dance with his mother.